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Stanford University Management Science and Engineering MS&E 260 –Fall 2016 Problem Session #3, Solution 2/6 Note that once you decide on T, Q_A and Q_B are determined since the orders should be such that the demand for A and B are exactly𝑄?= 𝜆?𝑇and 𝑄?= 𝜆?𝑇(no point to order more or less than that due to deterministic demand rates). The original cost in parts (a) and (b) are 212953 and 216667 respectively. Everything else being equal as compared to part (a), we have a higher cost in this situation as we lost the flexibility of planning each product however the addition of constraint in part(b) causes that cost to go much higher.

Stanford University

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